Note 3 — Loans

The Board of Directors and management review and approve the Bank’s loan policy and procedures on a regular basis to reflect issues such as regulatory and organizational structure changes, strategic planning revisions, concentrations of credit, loan delinquencies and non-performing loans, problem loans, and policy adjustments.

Real estate loans are loans secured by liens or interest in real estate, to provide purchase, construction, and refinance on real estate properties. Commercial and industrial loans consist of commercial term loans, commercial lines of credit, and Small Business Administration (“SBA”) loans. Consumer loans consist of auto loans, credit cards, personal loans, and home equity lines of credit. We maintain management loan review and monitoring functions that review and monitor pass graded loans as well as problem loans to prevent further deterioration.

The majority of the Bank’s loan portfolio consists of commercial real estate and commercial and industrial loans. The Bank has been diversifying and monitoring commercial real estate loans based on property types, tightening underwriting standards, and portfolio liquidity and management, and has not exceeded certain specified limits set forth in the Bank’s loan policy. Most of the Bank’s lending activity occurs within Southern California.

Loans Receivable

Loans receivable consisted of the following as of the dates indicated:

 

		March 31, 2014				December 31, 2013
		(In thousands)
Real estate loans:
Commercial property (1)
Retail		$	547,472			$	543,619
Hotel/Motel			331,971				322,927
Gas station			286,919				292,557
Other			751,122				731,617
Construction			125				—
Residential property			110,305				79,078
Total real estate loans			2,027,914				1,969,798
Commercial and industrial loans:
Commercial term			116,903				124,391
Commercial lines of credit			67,079				71,042
International loans			35,120				36,353
Total commercial and industrial loans			219,102				231,786
Consumer loans			29,356				32,505
Total gross loans			2,276,372				2,234,089
Allowance for loans losses			(56,593	)			(57,555	)
Deferred loan costs			1,741				964
Loans receivable, net		$	2,221,520			$	2,177,498

 

(1)	Includes owner-occupied property loans of $958.4 million and $957.3 million as of March 31, 2014 and December 31, 2013, respectively.

Accrued interest on loans receivable was $5.3 million and $5.4 million at March 31, 2014 and December 31, 2013, respectively. At March 31, 2014 and December 31, 2013, loans receivable totaling $1.00 billion and $568.7 million, respectively, were pledged to secure advances from the FHLB and the Federal Reserve Bank’s (“FRB”) federal discount window.

 

The following table details the information on the sales and reclassifications of loans receivable to loans held for sale by portfolio segment for the three months ended March 31, 2014 and 2013:

 

		Real Estate				Commercial and Industrial				Consumer				Total
		(In thousands)
March 31, 2014
Balance at beginning of period		$	—			$	—			$	—			$	—
Origination of loans held for sale			6,269				85				—				6,354
Sales of loans held for sale			(5,874	)			(84	)			—				(5,958	)
Principal payoffs and amortization			(5	)			(1	)			—				(6	)
Balance at end of period		$	390			$	—			$	—			$	390
March 31, 2013
Balance at beginning of period		$	7,977			$	329			$	—			$	8,306
Origination of loans held for sale			21,340				1,804				—				23,144
Reclassification from loans receivable to loans held for sale			3,373				—				—				3,373
Sales of loans held for sale			(26,907	)			(1,858	)			—				(28,765	)
Principal payoffs and amortization			(14	)			(1	)			—				(15	)
Balance at end of period		$	5,769			$	274			$	—			$	6,043

For the three months ended March 31, 2014, there was no reclassification of loans receivable as loans held for sale, and loans held for sale of $6.0 million were sold. For the three months ended March 31, 2013, loans receivable of $3.4 million were reclassified as loans held for sale, and loans held for sale of $28.8 million were sold.

Allowance for Loan Losses and Allowance for Off-Balance Sheet Items

Activity in the allowance for loan losses and allowance for off-balance sheet items was as follows for the periods indicated:

 

		As of and for the Three Months Ended
		March 31, 2014				December 31, 2013				March 31, 2013
		(In thousands)
Allowance for loan losses:
Balance at beginning of period		$	57,555			$	57,639			$	63,305
Charge-offs			(1,604	)			(738	)			(3,024	)
Recoveries on loans previously charged off			4,251				572				714
Net loan recoveries (charge-offs)			2,647				(166	)			(2,310	)
(Negative provision) provision charged to operating expense			(3,609	)			82				196
Balance at end of period		$	56,593			$	57,555			$	61,191
Allowance for off-balance sheet items:
Balance at beginning of period		$	1,248			$	1,330			$	1,824
Provision (negative provision) charged to operating expense			309				(82	)			(196	)
Balance at end of period		$	1,557			$	1,248			$	1,628

The allowance for off-balance sheet items is maintained at a level believed to be sufficient to absorb estimated probable losses related to these unfunded credit facilities. The determination of the allowance adequacy is based on periodic evaluations of the unfunded credit facilities including an assessment of the probability of commitment usage, credit risk factors for loans outstanding to these same customers, and the terms and expiration dates of the unfunded credit facilities. As of March 31, 2014 and December 31, 2013, the allowance for off-balance sheet items amounted to $1.6 million and $1.2 million, respectively. Net adjustments to the allowance for off-balance sheet items are included in the provision for credit losses.

 

The following table details the information on the allowance for loan losses by portfolio segment for the three months ended March 31, 2014 and March 31, 2013:

 

		Real Estate				Commercial and Industrial				Consumer				Unallocated				Total
		(In thousands)
March 31, 2014
Allowance for loan losses:
Beginning balance		$	43,550			$	11,287			$	1,427			$	1,291			$	57,555
Charge-offs			(1,128	)			(422	)			(54	)			—				(1,604	)
Recoveries on loans previously charged off			2,918				1,321				12				—				4,251
(Negative provision) provision			(1,110	)			(1,761	)			(752	)			14				(3,609	)
Ending balance		$	44,230			$	10,425			$	633			$	1,305			$	56,593
Ending balance: individually evaluated for impairment		$	1,029			$	3,973			$	117			$	—			$	5,119
Ending balance: collectively evaluated for impairment		$	43,201			$	6,452			$	516			$	1,305			$	51,474
Loans receivable:
Ending balance		$	2,027,914			$	219,102			$	29,356			$	—			$	2,276,372
Ending balance: individually evaluated for impairment		$	34,294			$	14,503			$	1,553			$	—			$	50,350
Ending balance: collectively evaluated for impairment		$	1,993,620			$	204,599			$	27,803			$	—			$	2,226,022
March 31, 2013
Allowance for loan losses:
Beginning balance		$	49,472			$	10,636			$	2,280			$	917			$	63,305
Charge-offs			(1,285	)			(1,575	)			(164	)			—				(3,024	)
Recoveries on loans previously charged off			181				484				49				—				714
(Negative provision) provision			(2,040	)			1,519				(370	)			1,087				196
Ending balance		$	46,328			$	11,064			$	1,795			$	2,004			$	61,191
Ending balance: individually evaluated for impairment		$	764			$	3,719			$	401			$	—			$	4,884
Ending balance: collectively evaluated for impairment		$	45,564			$	7,345			$	1,394			$	2,004			$	56,307
Loans receivable:
Ending balance		$	1,882,445			$	204,061			$	35,180			$	—			$	2,121,686
Ending balance: individually evaluated for impairment		$	31,317			$	16,695			$	1,639			$	—			$	49,651
Ending balance: collectively evaluated for impairment		$	1,851,128			$	187,366			$	33,541			$	—			$	2,072,035

Credit Quality Indicators

As part of the on-going monitoring of the credit quality of our loan portfolio, we utilize an internal loan grading system to identify credit risk and assign an appropriate grade (from (0) to (8)) for each and every loan in our loan portfolio. A third party loan review is required on an annual basis. Additional adjustments are made when determined to be necessary. The loan grade definitions are as follows:

Pass and Pass-Watch: Pass and Pass-Watch loans, grades (0-4), are in compliance in all respects with the Bank’s credit policy and regulatory requirements, and do not exhibit any potential or defined weaknesses as defined under “Special Mention,” “Substandard” or “Doubtful.” This category is the strongest level of the Bank’s loan grading system. It incorporates all performing loans with no credit weaknesses. It includes cash and stock/security secured loans or other investment grade loans.

Special Mention: A Special Mention credit, grade (5), has potential weaknesses that deserve management’s close attention. If not corrected, these potential weaknesses may result in deterioration of the repayment of the debt and result in a Substandard classification. Loans that have significant actual, not potential, weaknesses are considered more severely classified.

Substandard: A Substandard credit, grade (6), has a well-defined weakness that jeopardizes the liquidation of the debt. A credit graded Substandard is not protected by the sound worth and paying capacity of the borrower, or of the value and type of collateral pledged. With a Substandard loan, there is a distinct possibility that the Bank will sustain some loss if the weaknesses or deficiencies are not corrected.

Doubtful: A Doubtful credit, grade (7), is one that has critical weaknesses that would make the collection or liquidation of the full amount due improbable. However, there may be pending events which may work to strengthen the credit, and therefore the amount or timing of a possible loss cannot be determined at the current time.

 

Loss: A loan classified as Loss, grade (8), is considered uncollectible and of such little value that their continuance as active bank assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this asset even though partial recovery may be possible in the future. Loans classified as Loss will be charged off in a timely manner.

As of March 31, 2014 and December 31, 2013, Pass/Pass-Watch (grade 0-4), criticized (grade 5) and classified (grade 6-7) loans, disaggregated by loan class, were as follows:

 

		Pass/ Pass-Watch (Grade 0-4)				Criticized (Grade 5)				Classified (Grade 6-7)				Total Loans
		(In thousands)
March 31, 2014
Real estate loans:
Commercial property
Retail		$	534,305			$	7,328			$	5,839			$	547,472
Hotel/Motel			322,087				3,960				5,924				331,971
Gas station			279,137				115				7,667				286,919
Other			726,569				7,983				16,570				751,122
Construction			125				—				—				125
Residential property			108,837				—				1,468				110,305
Commercial and industrial loans:
Commercial term			102,243				2,207				12,453				116,903
Commercial lines of credit			66,111				—				968				67,079
International loans			34,540				580				—				35,120
Consumer loans			27,242				157				1,957				29,356
Total gross loans		$	2,201,196			$	22,330			$	52,846			$	2,276,372
December 31, 2013
Real estate loans:
Commercial property
Retail		$	531,014			$	5,309			$	7,296			$	543,619
Hotel/Motel			308,483				1,796				12,648				322,927
Gas station			279,636				3,104				9,817				292,557
Other			690,481				8,524				32,612				731,617
Residential property			77,422				—				1,656				79,078
Commercial and industrial loans:
Commercial term			107,712				2,007				14,672				124,391
Commercial lines of credit			69,823				—				1,219				71,042
International loans			35,777				576				—				36,353
Consumer loans			30,044				163				2,298				32,505
Total gross loans		$	2,130,392			$	21,479			$	82,218			$	2,234,089

 

The following is an aging analysis of past due loans, disaggregated by loan class, as of March 31, 2014 and December 31, 2013:

 

		30-59 Days Past Due				60-89 Days Past Due				90 Days or More Past Due				Total Past Due				Current				Total Loans				Accruing 90 Days or More Past Due
		(In thousands)
March 31, 2014
Real estate loans:
Commercial property
Retail		$	795			$	—			$	2,583			$	3,378			$	544,094			$	547,472			$	—
Hotel/Motel			1,326				—				1,288				2,614				329,357				331,971				—
Gas station			700				—				381				1,081				285,838				286,919				—
Other			1,873				—				1,805				3,678				747,444				751,122				—
Construction			—				—				—				—				125				125				—
Residential property			813				—				114				927				109,378				110,305				—
Commercial and industrial loans:
Commercial term			2,035				123				3,798				5,956				110,947				116,903				—
Commercial lines of credit			192				—				146				338				66,741				67,079				—
International loans			—				—				—				—				35,120				35,120				—
Consumer loans			540				18				227				785				28,571				29,356				—
Total gross loans		$	8,274			$	141			$	10,342			$	18,757			$	2,257,615			$	2,276,372			$	—
December 31, 2013
Real estate loans:
Commercial property
Retail		$	202			$	426			$	2,196			$	2,825			$	540,794			$	543,619			$	—
Hotel/Motel			1,087				—				1,532				2,619				320,308				322,927				—
Gas station			141				410				153				704				291,853				292,557				—
Other			423				2,036				839				3,297				728,320				731,617				—
Residential property			—				122				279				401				78,677				79,078				—
Commercial and industrial loans:
Commercial term			1,443				886				3,269				5,598				118,793				124,391				—
Commercial lines of credit			—				150				250				400				70,642				71,042				—
International loans			—				—				—				—				36,353				36,353				—
Consumer loans			311				42				77				430				32,075				32,505				—
Total gross loans		$	3,607			$	4,072			$	8,595			$	16,274			$	2,217,815			$	2,234,089			$	—

Impaired Loans

Loans are considered impaired when non-accrual and principal or interest payments have been contractually past due for 90 days or more, unless the loan is both well-collateralized and in the process of collection; or they are classified as Troubled Debt Restructuring (“TDR”) loans to offer terms not typically granted by the Bank; or when current information or events make it unlikely to collect in full according to the contractual terms of the loan agreements; or there is a deterioration in the borrower’s financial condition that raises uncertainty as to timely collection of either principal or interest; or full payment of both interest and principal is in doubt according to the original contractual terms.

We evaluate loan impairment in accordance with applicable GAAP. Impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent, less costs to sell. If the measure of the impaired loan is less than the recorded investment in the loan, the deficiency will be charged off against the allowance for loan losses or, alternatively, a specific allocation will be established. Additionally, loans that are considered impaired are specifically excluded from the quarterly migration analysis when determining the amount of the allowance for loan losses required for the period.

The allowance for collateral-dependent loans is determined by calculating the difference between the outstanding loan balance and the value of the collateral as determined by recent appraisals. The allowance for collateral-dependent loans varies from loan to loan based on the collateral coverage of the loan at the time of designation as non-performing. We continue to monitor the collateral coverage, using recent appraisals, on these loans on a quarterly basis and adjust the allowance accordingly.

 

The following table provides information on impaired loans, disaggregated by loan class, as of the dates indicated:

 

		Recorded Investment				Unpaid Principal Balance				With No Related Allowance Recorded				With an Allowance Recorded				Related Allowance				Average Recorded Investment				Interest Income Recognized
		(In thousands)
March 31, 2014
Real estate loans:
Commercial property
Retail		$	7,278			$	7,398			$	4,620			$	2,658			$	396			$	7,304			$	71
Hotel/Motel			3,510				4,136				2,992				518				59				3,531				49
Gas station			9,421				9,960				8,801				620				218				9,455				188
Other			11,544				12,893				8,314				3,230				355				11,624				223
Residential property			2,540				2,648				2,540				—				—				2,552				27
Commercial and industrial loans:
Commercial term			12,658				13,136				2,642				10,016				3,917				12,819				177
Commercial lines of credit			733				815				733				—				—				745				14
International loans			1,113				1,113				522				591				57				1,130				—
Consumer loans			1,553				1,670				637				916				117				1,558				15
Total gross loans		$	50,350			$	53,769			$	31,801			$	18,549			$	5,119			$	50,718			$	764
December 31, 2013
Real estate loans:
Commercial property
Retail		$	6,244			$	6,332			$	3,767			$	2,477			$	305			$	4,342			$	166
Hotel/Motel			6,200				6,940				4,668				1,532				1,183				5,125				530
Gas station			9,389				9,884				8,592				797				209				8,939				756
Other			11,451				12,882				9,555				1,896				351				10,014				1,047
Residential property			2,678				2,773				2,678				—				—				2,941				117
Commercial and industrial loans:
Commercial term			13,834				14,308				2,929				10,905				3,806				13,083				968
Commercial lines of credit			614				686				173				441				252				1,008				54
International loans			1,087				1,087				286				801				78				1,284				—
Consumer loans			1,569				1,671				644				925				284				1,612				71
Total gross loans		$	53,066			$	56,563			$	33,292			$	19,774			$	6,468			$	48,348			$	3,709

The following is a summary of interest foregone on impaired loans for the periods indicated:

 

		Three Months Ended
		March 31, 2014				March 31, 2013
		(In thousands)
Interest income that would have been recognized had impaired loans performed in accordance with their original terms		$	1,213			$	1,068
Less: Interest income recognized on impaired loans			(764	)			(896	)
Interest foregone on impaired loans		$	449			$	172

There were no commitments to lend additional funds to borrowers whose loans are included above.

Non-Accrual Loans

Loans are placed on non-accrual status when, in the opinion of management, the full timely collection of principal or interest is in doubt. Generally, the accrual of interest is discontinued when principal or interest payments become more than 90 days past due, unless management believes the loan is adequately collateralized and in the process of collection. However, in certain instances, we may place a particular loan on non-accrual status earlier, depending upon the individual circumstances surrounding the loan’s delinquency. When a loan is placed on non-accrual status, previously accrued but unpaid interest is reversed against current income. Subsequent collections of cash are applied as principal reductions when received, except when the ultimate collectability of principal is probable, in which case interest payments are credited to income. Non-accrual loans may be restored to accrual status when principal and interest payments become current and full repayment is expected.

 

The following table details non-accrual loans, disaggregated by loan class, as of the dates indicated:

 

		March 31, 2014				December 31, 2013
		(In thousands)
Real estate loans:
Commercial property
Retail		$	3,507			$	2,946
Hotel/Motel			2,510				5,200
Gas station			2,560				2,492
Other			5,008				4,808
Residential property			1,180				1,365
Commercial and industrial loans:
Commercial term			8,092				7,146
Commercial lines of credit			546				423
Consumer loans			1,631				1,497
Total non-accrual loans		$	25,034			$	25,877

The following table details non-performing assets as of the dates indicated:

 

		March 31, 2014				December 31, 2013
		(In thousands)
Non-accrual loans		$	25,034			$	25,877
Loans 90 days or more past due and still accruing			—				—
Total non-performing loans			25,034				25,877
Other real estate owned			—				756
Total non-performing assets		$	25,034			$	26,633

Loans on non-accrual status, excluding loans held for sale, totaled $25.0 million as of March 31, 2014, compared to $25.9 million as of December 31, 2013, representing a 3.3 percent decrease. Delinquent loans (defined as 30 days or more past due), excluding loans held for sale, were $18.8 million as of March 31, 2014, compared to $16.3 million as of December 31, 2013, representing a 15.3 percent increase.

As of March 31, 2014, there was no other real estate owned (“OREO”). As of December 31, 2013, there were three OREOs located in Washington and California with a combined carrying value of $756,000 and a valuation adjustment of $56,000.

Troubled Debt Restructuring

In April 2011, the FASB issued ASU 2011-02, “A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring,” which clarifies the guidance for evaluating whether a restructuring constitutes a TDR. This guidance is effective for the first interim or annual period beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption. For the purposes of measuring impairment of loans that are newly considered impaired, the guidance should be applied prospectively for the first interim or annual period beginning on or after June 15, 2011.

As a result of the amendments in ASU 2011-02, we reassessed all restructurings that occurred on or after the beginning of the annual period and identified certain receivables as TDRs. Upon identifying those receivables as TDRs, we considered them impaired and applied the impairment measurement guidance prospectively for those receivables newly identified as impaired.

 

The following table details troubled debt restructurings, disaggregated by concession type and by loan type, as of March 31, 2014 and December 31, 2013:

 

		Non-Accrual TDRs																				Accrual TDRs
		Deferral of Principal				Deferral of Principal and Interest				Reduction of Principal and Interest				Extension of Maturity				Total				Deferral of Principal				Deferral of Principal and Interest				Reduction of Principal and Interest				Extension of Maturity				Total
		(In thousands)
March 31, 2014
Real estate loans:
Commercial property
Retail		$	—			$	—			$	—			$	732			$	732			$	310			$	—			$	—			$	—			$	310
Hotel/Motel			1,243				749				—				—				1,992				1,000				—				—				—				1,000
Gas station			1,256				—				716				—				1,972				364				—				—				—				364
Other			393				1,251				528				—				2,172				3,358				—				803				2,020				6,181
Residential property			782				—				—				—				782				—				—				—				—				—
Commercial and industrial loans:
Commercial term			766				497				1,281				482				3,026				136				199				2,340				2,918				5,593
Commercial lines of credit			242				—				—				158				400				—				—				187				—				187
Consumer loans			—				—				149				—				149				—				—				—				—				—
Total		$	4,682			$	2,497			$	2,674			$	1,372			$	11,225			$	5,168			$	199			$	3,330			$	4,938			$	13,635
December 31, 2013
Real estate loans:
Commercial property
Retail		$	—			$	—			$	—			$	750			$	750			$	—			$	—			$	—			$	474			$	474
Hotel/Motel			1,272				758				—				—				2,030				1,000				—				—				—				1,000
Gas station			1,291				—				729				—				2,020				365				—				—				2,609				2,974
Other			403				1,279				555				—				2,237				2,956				—				1,253				2,027				6,236
Residential property			795				—				—				—				795				—				—				—				—				—
Commercial and industrial loans:
Commercial term			25				206				1,449				851				2,531				1,203				—				2,286				3,817				7,306
Commercial lines of credit			—				—				—				173				173				—				—				191				—				191
International loans			—				—				—				—				—				—				—				1,087				—				1,087
Consumer loans			—				—				—				—				—				—				—				149				—				149
Total		$	3,786			$	2,243			$	2,733			$	1,774			$	10,536			$	5,524			$	—			$	4,966			$	8,927			$	19,417

As of March 31, 2014 and December 31, 2013, total TDRs, excluding loans held for sale, were $24.9 million and $30.0 million, respectively. A debt restructuring is considered a TDR if we grant a concession that we would not have otherwise considered to the borrower, for economic or legal reasons related to the borrower’s financial difficulties. Loans are considered to be TDRs if they were restructured through payment structure modifications such as reducing the amount of principal and interest due monthly and/or allowing for interest only monthly payments for six months or less. All TDRs are impaired and are individually evaluated for specific impairment using one of these three criteria: (1) the present value of expected future cash flows discounted at the loan’s effective interest rate; (2) the loan’s observable market price; or (3) the fair value of the collateral if the loan is collateral dependent.

At March 31, 2014 and December 31, 2013, TDRs, excluding loans held for sale, were subjected to specific impairment analysis, and $2.7 million and $2.8 million, respectively, of reserves relating to these loans were included in the allowance for loan losses.

The following table details troubled debt restructurings, disaggregated by loan class, for the three months ended March 31, 2014 and 2013:

 

		March 31, 2014												March 31, 2013
		Number of Loans				Pre- Modification Outstanding Recorded Investment				Post- Modification Outstanding Recorded Investment				Number of Loans				Pre- Modification Outstanding Recorded Investment				Post- Modification Outstanding Recorded Investment
		(In thousands, except number of loans)
Real estate loans:
Commercial property
Other (1)			1			$	943			$	943				—			$	—			$	—
Commercial and industrial loans:
Commercial term (2)			5				829				788				2				205				205
Commercial lines of credit (3)			1				250				242				—				—				—
International loans (4)			—				—				—				2				1,584				1,430
Total			7			$	2,022			$	1,973				4			$	1,789			$	1,635

 

(1)	Includes a modification of $943,000 through a payment deferral for the three months ended March 31, 2014.

(2)

Includes modifications of $491,000 through a payment deferral, $107,000 through reductions of principal or accrued interest and $190,000 through an extension of maturity for the three months ended March 31, 2014, and modifications of $7,000 through a payment deferral and $198,000 through an extension of maturity for the three months ended March 31, 2013.

 

(3)	Includes a modification of $242,000 through a payment deferral for the three months ended March 31, 2014.

(4)	Includes modifications of $1.4 million through reductions of principal or accrued interest for the three months ended March 31, 2013.

During the three months ended March 31, 2014, we restructured monthly payments on seven loans, with a net carrying value of $2.0 million as of March 31, 2014, through temporary payment structure modifications or re-amortization. For the restructured loans on accrual status, we determined that, based on the financial capabilities of the borrowers at the time of the loan restructuring and the borrowers’ past performance in the payment of debt service under the previous loan terms, performance and collection under the revised terms are probable.

The following table details troubled debt restructurings that defaulted subsequent to the modifications occurring within the previous twelve months, disaggregated by loan class, for the three months ended March 31, 2014 and 2013, respectively:

 

		Three Months Ended
		March 31, 2014								March 31, 2013
		Number of Loans				Recorded Investment				Number of Loans				Recorded Investment
		(In thousands, except number of loans)
Real estate loans:
Commercial property
Retail			1			$	310				—			$	—
Hotel/Motel			1				1,000				—				—
Gas station			1				87				1				1,306
Other			2				481				—				—
Commercial and industrial loans:
Commercial term			1				53				8				762
Commercial lines of credit			—				—				1				188
Consumer Loans			1				149				—				—
Total			7			$	2,080				10			$	2,256

Servicing Assets

The changes in servicing assets for the three months ended March 31, 2014 and 2013 were as follows:

 

		Three Months Ended March 31,
		2014				2013
		(In thousands)
Balance at beginning of period		$	6,833			$	5,542
Additions			200				791
Amortization			(474	)			(329	)
Balance at end of period		$	6,559			$	6,004

At March 31, 2014 and 2013, we serviced loans sold to unaffiliated parties in the amounts of $340.5 million and $316.2 million, respectively. These represented loans that have been sold for which the Bank continues to provide servicing. These loans are maintained off balance sheet and are not included in the loans receivable balance. All of the loans being serviced were SBA loans.